Crude oil prices rose on Tuesday as Brent hit $75 a barrel for the first time since April 2019.
Brent crude futures for August rose 26 cents, or 0.4%, to $75.16 a barrel, reversing previous losses. It rose as high as $75.23 per barrel at the beginning of the session, seeing its strongest level since April 25, 2019.
West Texas Intermediate (WTI) crude was up 4 cents, or 0.1%, to $73.70 a barrel for July. August WTI rose 11 cents, or 0.2%, to $73.23 a barrel.
Brent rose 1.9% and WTI 2.8% on Monday.
Both benchmarks have risen over the past four weeks on optimism about the pace of global COVID-19 vaccines and the anticipated recovery in summer travel. This recovery pushed crude oil’s spot premiums to multi-month highs in Asia and Europe.
Oil prices are expected to take a strong stance with the expectation that fuel demand will increase rapidly with the economic recovery in Europe and the USA.
Brent crude oil price forecasts for this year and next year have risen. Tight oil supply and recovery in demand could push oil to $100 a barrel in 2022.
The price gap between the world’s two most actively traded oil benchmarks has narrowed to its lowest level in more than seven months. This indicates that US oil production is still in the throes of COVID-19 and the market will suffer from supply shortages.
Global demand recovery optimism supports the rally, market sentiment remains strong with an improved outlook for global demand, and the rally in Asian stock markets helps boost risk appetite among investors.
Global equities continued to rebound on Tuesday as Asian markets rebounded from a four-week low as investors’ focus on economic growth partially offset concerns about the Fed’s earlier-than-expected rate hike.
US crude inventories are expected to fall for the fifth week in a row. Distillate and gasoline rose last week, with weekly US inventory data expected as crude oil inventories fell for four weeks.
Talks to revive the Iran nuclear deal stalled on Sunday after radical candidate Ebrahim Raisi won the country’s presidential election.
The dollar fell after last week’s Fed rally. Oil prices began to rise noticeably on Monday as talks to end US sanctions on Iranian crude were suspended and the dollar retreated from two-month highs.
Raisi flatly refused to meet with US President Joe Biden on Monday, despite backing talks between Iran and six world powers to revive the 2015 nuclear deal and Washington lifting all sanctions. Therefore, the low probability of Iranian crude oil returning to the market also supports the market.
